Osteoclasts (OCs), which are essential for physiologic bone resorption, are derived from hematopoietic precursors in response to M-CSF and RANKL. In vitro experiments examining gene expression profiles of OC precursors exposed to RANKL and M-CSF led to identification of NFATc1 as a key regulator of OC formation and function. These experiments were performed with cells cultured on tissue culture plastic, whereas OCs develop in vivo in the context of a bone substrate. We compared the gene expression profiles of OCs cultured on bone with those obtained from the same cells on plastic and have identified multiple genes that are strongly and uniquely induced in OCs generated on bone. To identify the molecular mechanisms and signal pathways that mediate terminal OC differentiation and activation, we focused on regulator of calcineurin 1 (RCAN1), which is a prototypical member of the bone-regulated OC genes and is the best characterized and most highly expressed member of the RCAN family. RCAN1 controls the activity of calcineurin, which in turn regulates the activation of NFATc1, which plays a pivotal role in the transcriptional regulation of multiple OC-associated genes. Our analysis of the regulatory regions of the RCAN1 gene indicates several potential transcriptional and posttranscriptional regulatory mechanisms that may mediate bone-specific RCAN1 expression. Mice lacking RCAN1 exhibit a bone phenotype, characterized by increased trabecular bone with reduced OC-mediated resorption. Moreover, RCAN1 enhances transcription of multiple OC genes, indicating that RCAN1 plays an important role in controlling the genetic program and signal pathways of OC differentiation and activation. Based on these data we hypothesize that: RCAN1 expression and activity are up-regulated by interaction of OCs with bone and that RCAN1 plays a central role in regulating OC formation and activation by modulating the calcineurin-NFATc1 pathway. To pursue our novel findings, we propose the following specific aims: Aim 1 Identify the signaling pathways by which RCAN1 is activated during RANKL-induced OC formation on bone surfaces. Aim 2 Define the individual domains of RCAN1 that contribute to its role in OC biology. We will also test the hypothesis that the absence of RCAN1 will render animals resistant to the bone loss associated with estrogen deficiency in a mouse model of osteoporosis. Aim 3 will dissect the transcriptional and post-transcriptional mechanisms by which RANKL and bone substrate regulate expression of RCAN1. There remains an unmet need for more effective therapies to reduce bone loss and prevent potentially debilitating complications in patients with skeletal disorders. The proposed experiments utilizing OCs differentiated on bone will provide new directions and opportunities for developing more effective and specific therapies to prevent OC-mediated bone loss in osteoporosis and related forms of pathologic bone loss.